H.R. 1177: Improve and Enhance the Work Opportunity Tax Credit Act

The Work Opportunity Tax Credit has been one of the federal government’s primary tools for incentivizing employers to hire hard-to-place workers since 1996. It covers 10 targeted groups including veterans, SNAP recipients, ex-felons, and the long-term unemployed. At its peak, the program processed over over 2 million certifications annually, delivering roughly $1 billion per year in tax credits. But the credit expired on January 1, 2026 — and every day without reauthorization means fewer employers taking a chance on these workers.

HR1177 doesn’t just reauthorize WOTC — it substantially upgrades it. The base credit jumps from 40% to 50% of the first $6,000 in wages. A new retention bonus adds another 50% on the next $6,000 if the worker stays at least 400 hours, directly addressing the criticism that employers were using WOTC as a revolving door hiring subsidy rather than investing in long-term employment. For veterans, the numbers get much bigger: up to $28,000 in creditable wages for disabled vets, and up to $48,000 for veterans unemployed 6+ months — making veteran hiring one of the most financially attractive talent decisions a company can make.

The bill also removes the age cap for SNAP recipients (previously 18-39), opening the credit to older workers facing food insecurity. Brookings has noted that 97% of WOTC benefits flow to large corporations for workers who likely would have been hired anyway — a critique this bill partially addresses through its retention bonus structure. With bipartisan sponsorship from Ways and Means members and the credit already expired, the pressure to move quickly is real.